NAR’s Code of Ethics Dates Back to 1913
The deadline for the National Association of REALTORS® Code of Ethics training requirement is quickly approaching, with 2.5 hours of approved coursework due by the end of 2021. You may already know that The CE Shop offers engaging Ethics courses, but have you ever wondered why the Code of Ethics exists, and what went into its creation?
The history of the Code of Ethics dates back to 1913, just a few years after NAR — then called the National Association of Real Estate Exchanges — was founded in 1908.
“The first Code was written before license laws and most other regulations governing real estate existed and was seen as a declaration of the industry’s principles and beliefs,” says an article in REALTOR® Magazine celebrating the Code of Ethics’ 100-year anniversary in 2013.
“The Code, a living document that today undergoes annual review and revision, has been called a ‘golden thread,’ uniting those devoted to raising the standards of professionalism and service in real estate.”
Developing the Code
In the early 1900s, “a growing middle class began to desire homeownership,” but the real estate industry “was essentially unregulated, as this era preceded the adoption of regulatory licensing systems,” according to an article in Wisconsin Real Estate Magazine.
Unfortunately, that allowed con men to flourish. “Early 20th-century real estate was an environment marked by the fraudulent subdivision, multiple first mortgages, and other get-rich-quick schemes,” the article says.
When NAR was founded in 1908, its organizers hoped to create a set of standards for the real estate industry. Edward A. Halsey, chairman of the national committee, said: “We propose, if we can, to wipe out the riffraff that brings this business into disrepute.”
The newly created organization’s bylaws “included provisions for seven key committees, one of which was a committee on the Code of Ethics,” the REALTOR® Magazine article says.
Over the next several years, committee members dedicated their time to attending local board meetings, annual conventions, and otherwise exploring how ethics could be applied to the practice of real estate.
Per the REALTOR® Magazine article, “Through this process, two of the Code’s most vital and enduring concepts were developed. In 1910, C. F. Harrison of Omaha, Neb., pointed out that a code of ethics ‘naturally divides itself into two parts, the Broker’s duty to his clients and the Broker’s duty to his fellow Brokers.’ Today, the code has a third section: duties to the public.
“In June 1912, Frank Craven of Philadelphia, Pa., suggested the Golden Rule as the ideal starting point. It’s now part of the Code’s preamble in language that remains endearingly frozen in time: ‘Whatsoever ye would that others should do to you, do ye even so to them.’”
The committee presented a report to NAR’s Board of Directors at the organization’s sixth annual convention in Winnipeg, Manitoba, according to the Wisconsin Real Estate Magazine article.
During the 1913 convention, the Code was voted on and adopted, although it looked very different from NAR’s Code of Ethics today. (If you’re interested in paging through the first-ever Code of Ethics, an original copy is available to read on NAR’s website, complete with yellowing pages and hand-written comments indicating that the document was “adopted 1913.”)
Changes to the Code
In the century since it was adopted, the Code of Ethics has gone through many changes and revisions.
“Today, the Code is renowned for its progressive attitude toward equal opportunity and fair housing, surpassing the federal government’s own laws prohibiting discrimination against various protected classes,” the REALTOR® Magazine article says. “But it took many years for the Code to reach its current level of openness, and for several decades it was widely criticized for being discriminatory.”
For example, Article 34, which was added in 1924, said that members “should never be instrumental in introducing into a neighborhood a character of property or occupancy, members of any race or nationality, or any individuals whose presence will clearly be detrimental to property values in that neighborhood.”
Eugene Conser, NAR’s executive vice president from 1955 to 1970, explained in 1965 that Article 34 “reflected the then-widely accepted policy of ‘separate but equal,’” which was established under the Supreme Court’s Plessy v. Ferguson decision of 1896, the REALTOR® Magazine article noted.
“Conser cited another Supreme Court ruling, 1947’s landmark Shelley v. Kraemer, as the beginning of the end of Article 34,” the REALTOR® Magazine article says. “That decision struck down states’ rights to enforce restrictive covenants — in this case, an agreement among neighbors to bar real estate sales to African Americans and Asians. It led the association in 1950 to remove all references to ‘race or nationality,’ but the full article wasn’t removed until later.”
Other noteworthy changes to the Code over the years include bringing it in line with federal fair housing and employment law, which happened in 1974, and switching from using male pronouns to using gender-neutral language, which happened in 1989.
In 1978, William D. North, former Executive Vice President and General Counsel of NAR, wrote that the Code “represents one of those rare creations of man — a living document; a document which somehow preserves its significance, relevance, and usefulness despite the passing of years and the changing of the times.”
He continued: “The Code is an unusual Gift of Vision: the vision of those who dreamed that the business of real estate could become a profession, the vision of those who believed that the search for the highest and best use of the land required the highest and best measures of professional responsibility, and the vision of those who recognized private ownership of the land as indispensable to political democracy and a free and prosperous citizenry.”
Completing Your Ethics Training Requirement
Today, NAR’s Code of Ethics is a point of pride for many in the industry. The organization’s members are required to complete training on the Code of Ethics every three years, with the deadline for this cycle falling on 12/31/2021.
Still need to complete your Ethics training requirement? The CE Shop can help. Our Ethics course catalog includes Ethics at Work, Ethical Excellence: Raising the Bar, The Code of Ethics In Action: Real-life Applications, and Code of Ethics: Good for Your Clients and Your Business.
These comprehensive courses were designed to fulfill NAR’s requirements, allowing you to maintain your REALTOR® membership from the comfort of home. Contact your local association to see if it accepts our Ethics courses.
Don’t leave your Ethics requirement until the last minute! Plan ahead and enroll today.
Ready to Get Started With The CE Shop?
Whether you’re a new agent looking to start award-winning Pre-Licensing education or an experienced veteran wanting to finish your Continuing Education, we’ve got a 100% online curriculum that’s one of the most diverse and groundbreaking in the industry. And if you want to network with your peers, join our Facebook group and get connected!